Supreme Court:

What does this week's Supreme Court ruling on greenhouse gas emissions mean for the future of regulations coming out of U.S. EPA? During today's OnPoint, Thomas Lorenzen, a partner at Dorsey & Whitney and the former assistant chief in the Environment and Natural Resources Division at the Department of Justice, explains why he believes EPA has cause to be concerned about the ruling's implications on its existing source proposal. He also discusses his expectations for how the agency will address specific issues the justices raised as it responds to comments on the existing source rule.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Thomas Lorenzen, a partner at Dorsey & Whitney and the former assistant chief in the Environment and Natural Resources Division at the Department of Justice. Tom, it's great to have you back on the show.

Thomas Lorenzen: Thank you so much, Monica. It's good to be here.

Monica Trauzzi: Tom, the Supreme Court this week ruled in the [Utility] Air Regulatory Group v. EPA case. It was a 5-4 decision and there's a lot of mixed messaging that we're hearing from the various stakeholders on what exactly this all means. It's a bit of a complex case and outcome. How has EPA's authority been scaled back through this outcome?

Thomas Lorenzen: It's been scaled back in a couple of ways, but not significantly yet. One is while it appeared from Massachusetts v. EPA that any air pollutant means exactly that -- any air pollutant and includes greenhouse gases in all cases -- now as Justice Breyer points out in dissent that's been scaled back, that whether greenhouse gases are an air pollutant is a programmatic-by-programmatic inquiry, even in the Clean Air Act. So there is a limitation there.

Second, there are limitations on what EPA may do with Prevention of Significant Deterioration. It used to be that any air pollutant could get you into the program; now it's just conventional air pollutants that get you in. And once you're in, you have to control for greenhouse gases as well.

Monica Trauzzi: So would you largely consider this a win for the agency or is it a hit?

Thomas Lorenzen: I'd say at this point it's a significant win for the agency. As Justice Scalia himself said from the bench yesterday, EPA is getting almost everything it asked for. It's going to be able to regulate 83 percent of the emissions of greenhouse gases. Where this is not a win for EPA and where EPA has cause to be concerned is the implications for the future, and specifically we're talking about the existing source greenhouse gas standards that EPA is developing under Section 111(d).

Monica Trauzzi: And that is the big question. That's what everyone sort of wants to know, how it impacts future cases, in particular those existing source standards. How do you think this shapes the groundwork for future litigation, particularly on that case?

Thomas Lorenzen: What this does is it suggests that the court's going to be watching EPA like a hawk, that EPA is restricted to some extent to the traditional measures it uses to attack emissions of pollutants. And to the extent that EPA seeks to regulate broad swathes of the economy the court is going to be there to rein it back in, and that's where the Section 111(d) standard looks like it's going. It is beyond your typical source-specific regulation. It proposes to regulate energy usage more generally.

Monica Trauzzi: How does this decision pair with the previous greenhouse gas decisions we've seen the court make -- Massachusetts, AEP? Does it fall in the same line? Is it an expected decision based on what we saw in those cases?

Thomas Lorenzen: It's consistent with those. As I said, it certainly upholds EPA's authority to regulate greenhouse gases under the act. It confirms as the court said in American Electric Power v. Connecticut that the Section 111 authority to regulate new sources, and presumably existing sources as well, remains intact. The scope of that authority is unclear, but that authority is there. Where it differs is that, as I said, Massachusetts looked like it was clear. Greenhouse gases are pollutants for all purposes under the act. Now we know that's going to be a programmatic inquiry.

Monica Trauzzi: So right now EPA is in the midst of a comment period for the proposed rule. Do you think this ruling will have any bearing on what we see in that final rule?

Thomas Lorenzen: I don't know if it will shape the substance of the rule, but expect EPA to address the court's concerns when it responds to the comments that it's received on that rule or that it will be receiving on that rule. EPA is well-aware that there is a five-justice majority on the Supreme Court that is skeptical of its authority in this area, and it's going to attempt to reassure the court that it is not overstepping its bounds.

Monica Trauzzi: What stood out to you in what the judges had to say?

Thomas Lorenzen: Things that stood out -- there are a few statements in what Justice Scalia wrote that are significant. One is that any regulatory program that has, as he puts it, "an enormous and transformative expansion," and EPA's regulatory authority without clear congressional authorization is likely to be scrutinized with particularly heavy burden on EPA to explain where it gets its authority. So that is quite significant.

I think the court's statements as well about BACT are quite significant. They say that EPA has the authority to do BACT, but they reserve for another day what BACT actually looks like. Whether EPA can require such things as carbon capture and storage seems to be something that Scalia says yes, they can do. But whether they can do other things such as the efficiency improvements, requiring them to change their light bulbs, even there there is a question about what EPA might do. So we will have battles over what BACT actually is.

Monica Trauzzi: All right, very interesting stuff -- a little bit of a mixed bag. Thank you for coming on the show.

Thomas Lorenzen: Thank you very much.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.